Wednesday, February 10, 2016

Public comments at the SEC about IEX's exchange application: a seminar on the politics of market design

There's an exciting (if confusing) practical seminar on market design going on on the SEC's webpage these days, where they are posting comments on IEX's application to become an exchange.

First, here are some background news stories:

Matt Levine at Bloomberg, in December: The 'Flash Boys' Exchange Is Still Controversial

Robin Wigglesworth at the FT, this month: ‘Flash Boys’ trading venue application triggers backlash
"The Investors’ Exchange, a trading venue made famous by Michael Lewis’ Flash Boys book on high-frequency trading, has applied for full stock market status. But the application has triggered a deluge of responses and fanned the debate about the very nature of the US equity markets...."

And here is the SEC's comment page, a sort of flash mob exchange about markets and market design.

Guide to the perplexed: I like Eric Budish's comment, here: #371 …

About how to go through the many other comments, Eric writes: 
"For pro-IEX letters, the best place to start is the detailed letters from IEX itself. The letter from Healthy Markets is also very good on details. The letters from Southeastern Asset Management (co-signed by many other asset managers) and from Norges Bank (Norway’s sovereign wealth fund) are a bit shorter but give a sense of how pro-IEX asset managers see the debate.
For negative letters, the letters from trading firms Citadel and Hudson River Trading are quite detailed. The letter from NYSE has the distinction of being both detailed and comparing IEX to the fraudulent frozen-yogurt shop on Seinfeld.
Also recommended is the letter from Goldman Sachs, which, like my letter, supports IEX’s application but mostly talks about deeper structural issues."

You can search the comments, e.g. for "IEX"  or "Goldman Sachs," etc. to find them... 

No comments: